CIOs, Data and Patient Billing

Below is a Facebook message between a friend and me in which my friend asks for clarification about his hospital bills.

Healthcare CIOs are in a unique position to improve this terrible state of confusion and economic waste that exists in healthcare.  We understand the business and we understand the data of healthcare; and revealing data is the key to changing this dysfunctional situation.

--------------------------------------

Dear Dale,

Dumb question… I went in for surgery a couple of weeks ago. When it got to the payment part as we checked in they slid a paper in front of us. Without insurance my cost would be $30K, but with insurance my cost was $3.5K total with my portion being 10 percent of that cost. That's nearly 10 times different.

To me, this seems to be one of the major problems with healthcare. Do they really believe that some who can't afford insurance can afford to pay ten times the cost for service? Now there must be a reason and the only thing that I come up with is that unpaid services end up being submitted back and the government helps cover the cost. How far am I off? Why is this the case? Should the cost be the cost?

Thanks,

MS

--------------------------------------

Dear MS,

Well, first of all, I hope your surgery was minor and you're on the mend, buddy!  Please let me know.

What you experienced is par for the course and one of the main reasons that healthcare is in such a mess. Hospitals have "charges" for patients and they have "reimbursements" from insurance. Your $30K bill represents the hospital's charges, but their charges are not calculated with any sense of sanity. Those charges are arbitrarily established, usually by simply marking-up federal Medicare/Medicaid reimbursement rates by 300% - 500%.  In the rest of the business world, like Apple for example, products are priced according to "Cost of Production + Margin".    The goal is to minimize the cost of production and establish a margin that is reasonable for the market, meets shareholder goals, and achieves sustainability of the company.  Hospitals have no understanding of their true Cost of Production...they are generally clueless in that regard.  They understand Cost of Operation, but that’s not the same as Cost of Production—that is, how much does it cost for healthcare to produce high quality health, in your case, a successful surgery, or a healthy diabetic or newborn baby? 

Insurance companies would never agree to pay most hospital charges, because those charges are typically and arbitrarily high.  That's why hospital charges to patients include such things as a single acetaminophen pill that costs $6.  Instead, the insurance companies negotiate individual reimbursement contracts with the hospitals. That $30K bill that you received was meaningless from a true business sense—that’s not what the government (Medicare or Medicaid) or the insurance company is going to pay. But those charges are very meaningful to patients who don't have insurance because those patients are held hostage to these arbitrary hospital charges and pricing practices.  If you don't have insurance, you are faced with paying hospitals' charges for your bill, so the non-insured patients are penalized the most.   Keep in mind that 42% of bankruptcies in the US are directly related to healthcare expenses.

Each insurance company negotiates a separate contract with individual, somewhat more reasonable fees for reimbursing healthcare services and products...like $0.25 for a acetaminophen instead of $6. But these individual contracts are incredibly complicated and burdensome to manage, and make it confusing for patients and employers to understand the true cost of care. Imagine if your local grocery store negotiated a separate pricing structure for each customer... and there were no prices on the shelves. At the cash register, you wouldn't know your bill until the clerk scanned the products. The person ahead of you would pay $4 for a gallon of milk, while you might pay $2, and the person behind you would pay $1.50...depending on the contract that you negotiated with the grocery store. It would be incredibly inefficient to manage and confusing to everyone. But that confusion would make it nearly impossible for the customer to understand pricing, so the grocery store would likely take advantage of that confusion to keep prices higher than necessary for everyone. 

The confusion about pricing reinforces a concept that I call "disproportionate balance of knowledge", which means when one party knows a lot more about a situation than another party, the knowledgeable party is in a position to manipulate and take unfair advantage of the other party, and human nature being what it is, that unfair advantage is leveraged the vast majority of time in everything from parenting to real estate; car and plumbing repairs are notorious.  And healthcare is among the worst. But, if you can expose the pricing models-- cost of production and margin-- and you can make these prices transparent to the masses-- think Kayak, Zillow and CarMax-- it starts to balance the knowledge between the parties... and prices naturally come down.  By the way, the overhead cost of managing these bizarre pricing models in healthcare, with arbitrary charges and dozens of custom reimbursement contracts, adds 31% overhead to the cost of care which is at least $200B per year in the US, and that overhead is passed right along to patients and their families.  Thompson-Reuters recently published a report that revealed $36B in unnecessarily high US healthcare fees, directly attributable to hospitals’ variable and arbitrary charge practices.

So there you have it, brother. The mess of charges and reimbursements that we tolerate in healthcare, we would never tolerate in the rest of our lives.  We can't take the status quo any longer and the good news is, I truly believe that we’ve reached a tipping point of major and permanent change.

Helpful?

I might post this on my blog, actually...

:-)
Dale

If Healthcare Managed Restaurants

For the last couple of years, I've been using this metaphor to highlight the ridiculous nature of healthcare and particularly, healthcare billing-- the point being, we tolerate ridiculous behaviors and processes in healthcare that we would never tolerate in the rest of our lives, yet we keep building healthcare software that supports the insanity.  Why should we tolerate these crazy processes in what is one of-- if not the most-- important area of our lives?  Let’s at least build software that allows us to move away from these broken processes, even if we don’t have the cultural willpower to do so right away… at least give us the software option to be better, someday.

I used the metaphor again today in a lecture at HIMSS and several people asked me to blog it….so here you go….

If healthcare managed restaurants:

·      You wait 45 minutes for a table, even though you had a reservation.

·      You tell the waiter that you’re hungry– but there’s no menu.

·      The waiter returns with a meal that he thinks is appropriate for you…but he doesn’t know how much it costs.

·      You have no idea what the food is or what it costs, but you agree to eat it.

·      You leave without knowing your bill.

·      The restaurant sends the bill to your bank, not you.

·      Your bank tells the restaurant, “Your waiter ordered the wrong thing for you. We’re not paying for it.”

·      90 days later, the restaurant calls to tell you that your account is being turned over to collections.

:-)

Career Planning: Three Parts Chance, One Part Planning

This blog is mostly intended for the younger professionals whose careers are just beginning, but older geezers (like me) might also find it interesting, as they face the challenge of honoring their aging parents while maintaining their career. The key messages are: (1) Career paths and opportunities are three parts chance, one part planning and preparation; (2) The professionals that reverse that ratio— place great emphasis on planning and preparation, leaving very little room for chance—are often times the least happy and fulfilled. Wandering is sometimes the most direct path to a perfect destination; and (3) If you sacrifice your career in the interests of others, your career won’t sacrifice you.

There are too many first person pronouns in this story and for that, you have my first person apologies. This is an ode to a different person — a person who doesn’t look for what life owes her, but what she owes life — and the manner in which her attitude towards life has affected the way I look at my career. I share this story, though fearful that in doing so I disrespect the sanctity and solemnity of the entire event — the opportunity granted me. Hopefully, that fear is unfounded, the purity is intact, and the story somehow serves others who face similar quandaries. If nothing else, it serves as a long and public letter of thanks to very special people.

About a year ago, I had a fairly deep spiritual and introspective experience — the kind that happens to people who live alone on a tropical island, ala Tom Hanks in Castaway. It was the type of experience that forces you to rethink your priorities… I mean really rethink them, deeply.

During this experience, it struck me that the overwhelming priority in my life at this time should be to honor the irreplaceable time that remained in my mother’s life. At 87-years old, Ruby Sanders is still in amazing physical and mental condition. She still lives in the same house in Durango, Colorado where she raised six children; where winters are still winters. She’s a product of the Dust Bowl, escaping the plains of eastern Colorado and western Kansas with our grandparents, where they lived for a short time in a cabin with a dirt floor, escaping west to the mountains of Colorado just in time for the Great Depression.

 

During this hardest of times, the highlight of Christmas was often the gift of an orange or, even more special, a banana. Mom raised her first baby while our father was half-the-world away, in World War II, surviving The Battle of the Bulge.

A few short years after his return from WWII, they would suffer a parent’s worst nightmare, as our sister (their 18-month old daughter) would die painfully from aspirin poisoning. A few years would pass, the wounds of heart would become tolerable, and Mom and Dad would suffer yet another nightmare of parenting as our brother (their oldest son) at barely 18 years of age would be killed in an aircraft explosion. I can remember the scene at our kitchen table, early in the morning, when we found out — you don’t soon forget the inconsolable sobs and tears of your parents.

A few more years would pass — her wounds of heart now so deep they could never heal completely — and she would lose the love of her life (our father) at much too young an age, a victim of genetic cardiovascular disease. Some of us wonder if his heart failure was the result of a broken heart, never fully recovering from the tragic deaths of his children so young in life.

There are more stories of suffering for Ruby — too many to mention here — but throughout these periods of anguish, Mom would remain loving, caring, thoughtful, and resilient, never stumbling for more than a few steps, always hiding her broken heart to support the rest of her children, family, friends and community. Always, her first priority was instilling life and confidence in everyone around her.

About a year ago, during my Castaway reflective moments, I called Mom to check-in. Her voice was cracking with emotion, holding back tears. I prodded, “What’s wrong Mom?” to which she hesitantly replied, “Oh, I’m just so frustrated. I’ve been trying all morning to open this damn jar of peanut butter, but I can’t get it open and I feel so helpless!”

And with that, her little old lady tears came pouring out. It wasn’t long, maybe 30 seconds, and she stopped crying, apologized, and started counting her blessings — giving thanks for even having a jar of peanut butter when so many people have nothing.

With that conversation, I asked myself, “What kind of son am I if I fail to honor such a mother?  What if I fail to help her lead a worry-free life, the remainder of her life — a life that has had so many worries already?” I realized I would be no son at all.

I said a prayer at that moment, planting a seed of hope in the Universe, asking for an opportunity to return to our home town of Durango (population 12,000) so that I might help her lead that worry free life, the rest of her life. The likelihood of finding work in an isolated mountain town that would suit my career path was low, but I didn’t pray to that level of detail. All I asked for was the opportunity to return to Durango, in hope and faith that the details of my career and livelihood would work out.

Three months later, after more prayers and contemplation, I announced to our CEO of the Cayman Islands Health Services Authority that I would be leaving — two years sooner than planned. I didn’t have another job lined-up, nor any clear idea of what I might do to make ends meet in Durango, but my conscience  told me to commit first and plan later….the plan would come together.

Thankfully, it did, with the help of my dear friend Daphne Lawrence and the gracious willingness of Dave Garets at The Advisory Board (where I’ll be taking on a new position), and Lizzette Yearwood, my current CEO, who supported my transformation to a telecommuting role. Now, I have the privilege of returning home with nary a skip in my career to spend irreplaceable time with Mom, sisters, family, and friends.

I share this story in hopes that it might help those who are younger in their career and believe that you can and should plan every step of your career. I say rubbish. Keep your hearts opens to non-career priorities and the opportunities of random chance, for therein is the adventure of life. Jump when there is no safety net and see what happens. You’d be surprised how often you can fly.

Data Warehouse Data Modeling For CIOs

Data modeling is the single greatest cause of long term failure and under-performance in data warehousing and business intelligence systems, across all industries.  It is compounded as a problem in healthcare due to the complexity of the data and the analytic environment.

Errors in data modeling strategy gestate slowly, usually emerging in 2-3 years after go-live when the demands for more flexible, complex and real time analytics increase in the maturation of a data driven culture.  The most debilitating and common mistake in data modeling is the assumption that a star schema (sometimes referred to as a dimensional model) can meet all of the analytic needs of the healthcare enterprise.   Consider a traditional library of books as a metaphor.  An encyclopedia can serve as a general reference for simple research in elementary and middle school, but its content is soon not sufficient for satisfying the more in-depth and complex research of a college or graduate student.  Initially, to organizations who are early on the path of data driven decisions and research, star schemas often appear useful and valuable, but over longer periods of time, typically 2-3 years, as the data driven culture matures and the analytic needs become more complex, star schemas suffer from a number shortcomings including the loss of source system data fidelity and query performance problems.  

Star schemas have the unusual effect of requiring increasingly complex SQL statements that would be less complex under more appropriate data modeling environments.  These complex SQL statements take longer to develop, require higher skills on the part of the data analysts, and lead to programming errors.  Often times, these programming errors go undetected, resulting in the most risky analytic errors—false positives and false negatives-- in reports that are intended to inform significant business and clinical quality decisions. In summary, star schemas are useful in supporting relatively simple analytic needs such as counts and summations of events and financial transactions, but they should not be used as the single-- or even the dominant-- strategy for data modeling in healthcare BI systems.

Retaining the fidelity and detail of the source system data as you pull that data into the data warehouse is critically important.   Often times, inexperienced data architects will overemphasize the “Transform” in the ETL process and in so doing, will lose the ability to transform and evolve data structures within the data warehouse to meet new analytic needs that they didn’t anticipate in the original design.   If uncertain about the organization’s analytic requirements, don’t over analyze and become lost in requirements gathering.  Start simple, with the known analytic needs in today’s US-based healthcare enterprise, for example:

•             JCAHO

•             HEDIS

•             NCQA

•             PQRS

•             MU

•             Professional accreditation, such as STS, ACS and Trauma

•             State-specific reporting such as Cancer, HIV and Behavioral Health

•             Organizational goals regarding Clinical Service Lines or Quality Improvement  Programs

•             Disease registries for both large and small n diseases and conditions

It is critically important to configure transaction systems in a manner that will support the analytic needs of the organization; otherwise, the best data modeling strategy is of little or no value in the BI system.  Many times, electronic health records are rushed into deployment with physician adoption being the most important criteria.  While this is an important goal, pausing in the planning phase to configure the EHR transaction system so that it supports the analytic needs of the physicians and organization will actually improve physician adoption, not detract from it.  The same analytic needs described above should be addressed in the configuration of the transaction system EHR-- work backwards from these known requirements into the data collection strategy when configuring the EHR and your analytic capabilities in the data warehouse will benefit enormously.

The best data modeling strategy for a BI system is one which is tailored to meet the specific analytic environment or need, and thus adapts to the data analyst rather forcing the data analyst to adapt to the data model.  In the most successful data warehouses and BI systems, a review of the data modeling strategy would reveal a combination of 1st, 2nd, and 3rd normal form, star, and snowflake models, arranged in database schemas according to specific analytic subject areas, analogous to the books that are organized by sections and subject areas in a library. For example, the analytic needs associated with hospital case mix data can usually be satisfied with a 1st normal form data model augmented by a star schema.  The analytic needs for a chronic disease management environment can generally be satisfied with the combination of a 1st and 2nd normal form data model.  The same data modeling strategy can be used to support HEDIS, NCQA, and JCAHO reporting needs.  The analytic needs associated with managing a physicians’ group, where productivity, claims processing, and accounts receivable reports are important, can usually be satisfied with a 2nd normal form data model augmented by a star schema.

When in doubt about the best data modeling strategy to use for a particular analytic need, the best option is usually a 1st normal form.  These “flat” data models can often times be millions of records deep and over 100 columns wide.  Quite often, this simple approach is sometimes counterintuitive to many data architects who lack analytic experience, but these unassuming data models meet a very broad number of analytic scenarios.  It is also worth noting that the growing use of and familiarity with spreadsheet-based analysis (e.g., Excel) among data driven cultures is particularly well-suited to simple, flat tables of rows and columns in the data warehouse where relational joins to other tables are less important than filters, sorts, and pivot tables to the data analysts’ needs.

 In conclusion, the most valuable and extensible data warehouse and BI systems in all industries, especially healthcare, use a data modeling strategy which leverages numerous data modeling techniques applied and arranged in adaptive fashion to meet the needs of data analysts in specific subject areas of reporting and analytics.

Top Ten Essential Vendor Behaviors in Today’s Market

A few weeks ago, a noteworthy healthcare consulting firm asked for input that they could pass-on to vendors that would help those vendors understand the relationship imperatives that are critical to a healthcare CIO, right now, in today’s market.  After giving this topic a few days of background thought, I concluded two things:  (1)  At least 60% of the imperative relationship advice that I give today, applies at any time in history; and (2)  My current Cerner account representative, Lisbeth Fabiny, was a great source of reference.  I found myself asking, “Why do I value Liz’s support so much?  What does she do that makes her feel so valuable?” 

It is worth noting, I have nothing to gain by offering meaningless compliments to Liz or by association, Cerner.  Cerner and Liz will both tell you that I can be very demanding and uncompromising in my expectations and criticisms of products, services, and expenses.  But, it’s also important and proper for me to praise the positive, not just complain about the negative, and in that vein, Liz Fabiny is a role model for vendor support and customer relations.  The best I've ever had in my 30 year career.

Here are the Top Ten:

1.       Help Me Compete:  Help me build my "Annual Report for Information Technology" as if my IT organization were a separate, stand alone business that could be outsourced.

2.       Help Me Hire:  The market for healthcare IT employees has never been more competitive.  If you know I'm having a hard time recruiting for a critical position that is important to the success of your product in my organization, help me find a great match. 

3.       Help Me Measure:  The Age of Analytics in healthcare is just beginning.  Our industry is way behind in the proper use of data to drive costs down and quality up.  Help me address my short term analytic needs, but do so within the scope of a longer term strategy. 

4.       Help Me Save: Simplify your licensing, billing and contract administration.  Make it as easy as possible for me to manage my expenses with you, and especially make it easy to predict and budget for increases in prices due to inflation, increased number of users, transactions, etc.  When you give me new contract to sign, put a face sheet on it that summarizes the key issues and terms.  Don't make me read 15 pages of legal jargon.  Likewise, if you know of a creative way for me to reduce licensing fees, try to be motivated by our long term relationship instead of your immediate potential loss of commission.   You will win more of my business, easily.

5.       Help Me Listen: Be proactive in extracting the ROI and value from your products.  Help me look good and thus make your product look good, too.  If you know that I'm under-utilizing your products or have them configured improperly in some way, pester me until I fix it.  I'm busy and juggle lots of priorities.  Be the squeaky wheel until I listen.

6.       Help Me Expand: Annual conferences and blogs are not enough for me to keep up with everything going on in healthcare right now.  Help me build close relationships with a limited number (3-4) of peers or mentors who have a similar organization, product mix, and profile so we can learn from one another.  Force us to meet and hold a conference call every once in awhile.  Facilitate the meetings.  Help us reuse strategies, policies, and technology as much as possible.

7.       Help Me Plan: Help me build my strategic roadmap by overlaying the needs and culture of my organization with your products and the future outlook of the industry.  Look ahead for me and pester me until I build that roadmap with you.  I am particularly concerned about the growing sophistication of cyber attacks.  And I'm also concerned that I'm not leveraging mobile computing as well as I could.  Push me on these two issues, please.

8.       Help Me Migrate: Help me build the cheapest, safest, quickest path to ICD-10 adoption for my company and critical partners in the insurance industry.

9.       Help Me Prove:  Help me build the cheapest, safest, quickest path to Meaningful Use qualification for my company--  And don’t charge me anything extra because this is something that you should have done for every customer, a long time ago.  The Meaningful Use legislation forced it, but like HIPAA, we should have been doing this all along.

10.   Help Me Evolve:  ACOs are coming; one way or another.  Even if they are nebulous right now, we know that there are certain characteristics that will survive, regardless.  In particular, you better have a product strategy for engaging patients in greater accountability for their own care, and the changes in the revenue cycle required for managing the risk of bundled payments.

The ROI of Evidence Based Protocols

A new study from Johns Hopkins reveals the value of standard protocols (aka, clinical practice guidelines) on reduction of central line infections in the ICU--  $1.1M per year. If I were CEO of an insurance company or major employer paying for healthcare, my contracts would require my healthcare providers to show proof that they’ve implemented evidence based protocols to achieve the best patient care and at the lowest cost possible.

Interesting to note that development of this singe protocol/CPG at Johns Hopkins was $160K.  Repeat:  $160K to develop a single protocol.   In the Cayman Islands, we are in the midst of implementing an Evidence Based Practice Strategic Initiative, anchored by a collaborative effort with the British Medical Journal and Cerner.  In only a few months time—which could be compressed to a few weeks with the proper focus-- we already have four protocols prepared and those will soon be embedded in Cerner’s PowerChart and reflected in Cerner’s Chronic Condition Management reports.  Our cost-per-protocol will be a fraction of $160K as will the Time to First Value.

I find it more and more amazing that anyone practicing medicine today could possibly argue against the adoption of standardized evidence based protocols, CPGs and order sets, because, as the argument goes, adopting them represents a threat to “independent thinking by the doctor.”  (Yes, that’s a real and recent quote from a physician).  Further, I find it even MORE amazing that anyone would argue that these same protocols should be developed internally, rather than through an orders-of-magnitude less expensive service such as that we enjoy through BMJ and Cerner-- which will also, by the way, produce a better product than could be produced internally because of the robust process and resources available to BMJ that cannot (and should not) be replicated at every hospital in the world.

Accountable Care Organizations: Measurement and Management

This recent JAMA article (link below) on ACOs is a very common sense, succinct summary of healthcare’s future challenges.  As recently described by Francis Crosson, senior fellow at the Kaiser Permanente Institute for Health Policy, and despite the justifiable criticisms of the Affordable Care Act, Accountable Care Organizations cannot fail.  They will, in some form, define the future of healthcare, and underlying their success is the collection, measurement and feedback of data to healthcare organizations and patients; and the management of cultural change driven by that data.  The title of the JAMA article’s last paragraph sums it up nicely--  THE WAY FORWARD: MEASUREMENT AND MANAGEMENT.

As dramatic as the changes feel now, the data ecosystem of healthcare needs to change even more dramatically, but current healthcare IT vendors and systems are saddled with application architectures that simply can’t keep up with the rate of change.   It’s like trying to transform an office building in a manner of days that is built of concrete inner walls--we need modular inner walls to meet the needs and deadlines.  As one vendor CEO recently bragged—ironically-- 60,000 labor hours were required to change their application to meet Meaningful Use requirements.   And Meaningful Use is an easy hurdle to clear in comparison to what lies ahead. 

If ever there were a ripe market opportunity for disruptive innovation to displace entrenched, concrete walls of old-school thinkers and technology, now is the time.

Implementing Accountable Care Organizations